Buoyant stock and property markets are expected to benefit Hong Kong's public finances this year, delivering the biggest surplus since the government recorded a HK$123.6 billion windfall three years ago, according to estimates by leading accounting firms.

Although official figures show a HK$18.4 billion deficit for the six months to September 30, tax revenue is usually collected in the second half. Income from land sales and stamp duties on stock and property transactions are expected to be strong. The government has already reaped a whopping HK$60 billion in land sales and premiums, higher than its full-year estimate of HK$34.1 billion. The financial year ends on March 31.

Compared to the government's initial budget projection in February of a HK$25.2 billion deficit for 2010-11, a surplus of HK$73.3 billion now seems likely, according to estimates by accounting firm Deloitte Touche Tohmatsu.

KPMG tax partner Jennifer Wong How-yee put the surplus at about HK$40 billion but said the final figure could top HK$80 billion. That would depend on what new measures, if any, the government introduces to cool the red-hot property market and whether land for luxury housing, including sites in Stubbs Road and Shouson Hill, are auctioned off.

Stamp duty levied on stock and property deals may reach HK$50 billion, against the government's HK$30 billion forecast. In 2009-10, the government collected HK$42.38 billion in stamp duty.

The relatively quick return to fiscal health, and improvement in the local economy despite worries about the pace of the global recovery - unemployment was 4.2 per cent last month, close to full employment - is bound to bolster public calls for handouts and relief measures. In his policy address, chief executive Donald Tsang Yam-kuen announced a HK$10 billion fund to help the poor.

Yvonne Law Shing Mo-han, Deloitte's national chief knowledge officer and partner, said taxpayers should be allowed a deduction of up to HK$100,000 a year on their home loan principal for 10 years, not just for mortgage interest. But Wong said this would attract more funds to the property market. A decade ago, a similar measure was used in Shanghai. She said people had come to expect handouts but they did not boost the local economy.